China, Australia act on trade pact
(CNN) -- Australia and China have signed a pact to begin negotiations on a free trade agreement (FTA), with Australian Prime Minister John Howard saying Canberra recognizes China as a "market economy".
A memorandum of understanding between China and Australia was signed in Beijing on Monday night by Howard and Chinese Premier Wen Jiabao.
Howard said concluding the FTA would be a challenging and complicated task.
"But we approach it with a great deal of optimism and enthusiasm and I believe China will do likewise, and if that attitude continues there is no reason why after a difficult negotiation success cannot be achieved," he said.
China is Australia's third largest trading partner, with two-way trade between the countries valued at more than Aust. $30 billion ($23 billion) in 2004.
A successful conclusion to negotiations would see Australia become only the second developed nation after New Zealand to have signed such a pact with China.
Wen said while China was willing to pursue the free trade process, the two countries needed to build up political trust and consult each other on regional security issues.
"Under the complex international situation, the deepening of Sino-Australian relations is not only in the fundamental interests of the peoples of the two countries, but is also in the interests of peace and stability in the Asia Pacific region," Wen said, according to a report on the Australian Broadcasting Corp. Web site.
His comments come at a time when China is embroiled in a nasty spat with Japan that has plunged relations between the two Asian neighbors to their lowest point in 30 years. (Full story)
China has refused to apologize to Japan for a series of violent anti-Japan protests across the country recently, insteading claiming Japan should confront its wartime history.
Australia has agreed to recognize China as having reached "market economy" status -- a critical step for China's World Trade Organization undertakings, giving Beijing a better platform to negotiate trade disputes.
In return Beijing has agreed that any trade agreement will be comprehensive and no sensitive sectors -- such as agriculture -- will be left out.
Last week Australia agreed to begin negotiations on a free trade deal with Malaysia. It already has FTAs with the United States, Thailand, Singapore and New Zealand.
Following two days of talks Howard will travel to Tokyo on Tuesday before returning to China on April 22, to attend the annual Boao Forum for Asia in southern China's Hainan province. Howard invited Wen to visit Australia this year.
Howard's visit to China is his fifth as Australia's Prime Minister.
